Year 1 macroeconomics definitions

Definitions and Key Concepts in UK Economy

Actual Growth: Measured by changes in real GDP, indicating the increase in economic performance over time.
Aggregate Demand (AD): The total level of demand in an economy at a given price at a moment in time.
Aggregate Supply (AS): The total output in the economy at a given price at a moment in time.
Animal Spirits: Represents the level of confidence of business owners in the economy.
Balance of Payments: A record of all financial transactions between one country and the rest of the world over a period.
Base Year: A year used as a reference point for comparing data; it is assigned an index figure of 100.
Boom: The peak phase of the business cycle marked by high growth.
Budget: The government's plan for spending and taxation.
Budget Deficit: Occurs when government spending exceeds its income.
Budget Surplus: When government income is greater than spending.

Circular Flow: Describes how goods, services, and money move through the economy.
Claimant Count: Measure of unemployment based on the number of individuals receiving unemployment benefits.
Consumer Price Index (CPI): An official measure for calculating inflation using a weighted basket of goods.
Consumption: Total consumer spending on goods and services.
Cost-Push Inflation: Inflation that arises from a decrease in aggregate supply.
Current Account: Balances the trade of goods and services and income.
Current Account Deficit: Occurs when more money leaves a country than enters it.
Current Account Surplus: When more money enters than leaves the country.
Cyclical Unemployment: Unemployment resulting from a lack of aggregate demand.

Deflation: A sustained decline in the prices of goods and services.
Deflationary Policy: Policies aimed at reducing aggregate demand.
Demand-Pull Inflation: Inflation resulting from an increase in aggregate demand.
Depreciation: The reduction in the value of assets over time.
Direct Tax: Taxes paid directly by individuals to the government.
Disposable Income: The amount available for spending or saving after taxes have been accounted for.
Economic Growth: An increase in an economy's capacity to produce goods and services, generally indicated by an increase in real GDP.
Employed: Individuals performing at least one hour of paid work weekly, or those engaged in less formal work conditions.

Expansionary Policy: Government strategies aimed at increasing aggregate demand through spending and tax cuts.
Exports: Goods/services sold to other countries, adding to national income.
Fiscal Policy: Government adjustments in spending and taxation to influence the economy.
Frictional Unemployment: Unemployment that occurs as individuals transition between jobs.
Gross Domestic Product (GDP): Total value of goods/services produced in a country.
GDP Per Capita: GDP divided by the population to provide a per-person income perspective.